The Disclosure of Accounting Information Quality and Capital Allocation Efficiency -- A Study Based on the Perspective of Investment-Cash Flow Sensitivity

Based on the perspective of investment-cash flow sensitivity, this paper studies the effect of The Disclosure of accounting information quality on capital investment efficiency. Empirical results show that generally high quality accounting information reduce the investment-cash sensitivity. Further study found that high quality accounting information can not only effectively reduce the investment-cash sensitivity caused by financing constraints, but also effectively reduce the investment-cash sensitivity caused by agency conflicts. Moreover, the conclusion is robust when including many investment-related variables. From a new perspective, this study proved that high quality accounting information effectively improve the efficiency of capital investment by alleviate financing constraints and agency conflicts.